Checked: startups from Russia await in China

    Daniil Kozlov, Business Development Director at GVA LaunchGurus , on how to conquer the Asian market, what conditions for start-up entrepreneurs are created in China and what projects and technologies are in demand there today.


    What are the conditions for the development and support of entrepreneurship in China today?

    Just look at the statistics: over the past 6 years, only 45 incubators have been built in Beijing (excluding private ones). Large-scale programs were launched, the government at various levels takes the initiative and tries to allocate funds for the development of the infrastructure of entrepreneurship - this is on the agenda as one of the most important national tasks. This is not to say that incubators in China are much better than ours, however, the growth rate and volume are impressive. The state clearly creates and provides the conditions for the development of small and medium-sized businesses. In addition, a network of private investors is growing very rapidly in China. Of course, as in Russia, there are gaps there that impede the development of this sector: a small number of business angels, insufficient private investment, entrepreneurs are not yet so qualified to, from a business point of view, think through a business model, its positioning, as in the same Valley. But they definitely have a desire to develop in this direction.

    As co-organizers and partners of Plug & Play, we attended the US-China Startup Investment Forum conference, presented our portfolio projects and consolidated our interaction with Chinese partners. It is worth noting the level of the forum in Chinese Zhengzhou. The conference was opened by the mayor and vice-governor of Henan, the largest province in China, with more than 100 million inhabitants. Zhengzhou is its center. From the point of view of entrepreneurship, the city is not yet so bright in comparison with Beijing, Shanghai, Hong Kong, but, nevertheless, the local government has a clear goal to develop this area, which is visible to the naked eye. From this point of view, the government showed great attention to this conference - the event turned out to be gigantic, there were about 2-3 thousand people, given that the event lasted two and a half days.

    How can a startup enter the Chinese market and why participate in conferences and forums?

    If a startup wants to enter the Chinese market, it’s definitely not worth looking for a partner remotely, you need to go and dive into the environment, communicate with people. When you come from the street or write to e-mail, the Chinese may simply not respond. In our case, startups come on behalf of an organization that the Chinese know well, which already have respect - in this case, a completely different perception is formed and people become much more open. In the framework of such events, it is much better to develop a business and build relationships. Such conference formats are practically not being made in Russia at all, few travel to China, mainly only small groups of investors and experts. And this must be done, since we have many points of contact, from which we can work.

    At the US-China Startup Investment Forum, we had a delegation, joint with Plug & Play and co-organizing partners like us, GVA LaunchGurus, which consisted of entrepreneurs, experts and investors. The program of the event consisted of discussion panels, which were attended by experts from different countries, round tables and pitching of more than 60 entrepreneurs. 7 startups from GVA LaunchGurus went to the conference, including projects from GVAccelerator accelerator: Hotel Face Alexey Zhurik, Oleg Senkov from Arenza, IPV17, CEO Vasily Prosin, SpyLance, CEO Mikhail Khusainov. Olga Oshurkova also came with Diva Ora. Our partners from Azerbaijan brought one project: SmartPlane.

    From the Chinese side there were a lot of media projects and applications. The Peer-to-peer lending industry is also growing incredibly: this market is valued at 140 billion yuan per year. In China, this particular direction is widely represented among startups. There were several IT projects. For our part, there were completely different start-ups: Internet aggregation, a clean IT protocol, an application to improve the services sector in hotels, a platform for drones, bottles for feeding children. We brought from Russia not only virtual projects, but also startups from the real sector, this diversity impressed our colleagues in China.

    The presentations of all participants were at different levels, but, in general, I can say that Russian projects, including startups that left GVAccelerator, were better prepared. In China, there is a wonderful structure for incubating startups, but few strong acceleration programs. However, from the point of view of pitch, we have a slightly different approach to preparation, a more pronounced focus on the business model, and not on the product, on understanding how the business will grow, which is really necessary for this. The Chinese had many presentations, more about the product itself and its features.

    What startups were interesting to colleagues from China?

    DivaOra, as a company presenting a special way of manufacturing baby food products, was very interested in the Chinese because of the peculiarities of production. The Hotel Face project was interesting because in China there is a large growing tourism industry and they are interested in new solutions; they lag behind in hotel technologies. “SmartPlane” is interesting because there are many companies that produce drones; the basic platform for creating them may be useful to them.

    Once again I want to note why it is necessary to go. In China, they are very tuned to work with the Russians. Our companies were not deprived of attention throughout the conference: colleagues from China approached each startup, offered their services, production partnerships, possible investments. China lacks serious technology projects with which Russian entrepreneurs can enter this market.

    Olga Oshurkova, founder and CEO of DivaOra, shared her impressions of the trip with us: “Such events open up a wide range of opportunities for entrepreneurs. It is important how much the entrepreneur himself takes advantage of the opportunities, because no one will do his job for him. These events are an excellent opportunity to remove barriers (psychological, organizational, cultural, etc.) for building an international business. This is the first step, which is very difficult to do on your own for various reasons. After this conference, it will be much easier for me to independently organize my next visit to China, having previously developed a schedule of meetings and movements. This conference was organized at a high level, Our delegation in the GVA LaunchGurus group was greeted as VIPs and personal assistants significantly helped to adapt to the new environment. The results of the trip for DivaOra are the appearance of the first real contacts in China through which it is planned to work out the ways for investors and partners, and personal acquaintances allow, in the future, if necessary, to attract new employees (who previously agreed) to work in a company in China ".

    In reality, our experience has shown that such trips are necessary for the development of relationships and partnerships. People are afraid to bring startups to China, but why? It was a very important experience for us, because almost all startups were able to find new partners in China with whom it would be possible to start working, now we are called back to new events. There were people from all over Asia, representatives from America, so it was an opportunity to find partners around the world.

    Vasily Prosin, IPv17 project said: “It is immediately obvious that the Chinese market is a rapidly growing economy, because the Chinese partners were literally greedy for new startups and new ideas. They grabbed for everything new, which unfortunately is not available in emerging markets. It seemed to me that the main criterion of interest is something new. If new, then we are ready to participate. New contacts were the result of the trip, I personally, since I have a high-tech startup, found contacts of potential partners and continue to communicate with them regarding future cooperation. Definitely, we were the most advanced delegation, were organized. The trip together with GVA LaunchGurus opened up additional opportunities for us to meet with partners and investors. ”

    Of course, in addition to new contacts and partners, projects as a result receive a large amount of information, for many difficult to access, nevertheless, necessary for business development. Participants see how their specific industry is developing in China and can understand how relevant their startup is. Having visited this event and having talked with experts and projects from Asia, some entrepreneurs realized that they were wasting time, but they had to go to China, look for partners, and establish production there. And in the development of your business it is very important not to be late.

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